Telstra rivals lean on Conroy

At the end of a big week for Labor’s $35.9 billion national broadband network,
Stephen Conroy
faces a new headache.

The chief executives of
Telstra
’s biggest rivals are pressuring the Communications Minister to ensure a tough separation of Telstra’s retail and wholesale assets network as part of the government’s NBN project.

Seven bosses, including Optus’s
Paul O
’Sullivan, have written to the minister warning that Labor’s reforms will fail if Telstra is allowed to continue (as they see it) to abuse its fixed-line monopoly during the 10 years it will take to transfer users to the NBN.

Just to make clear their strength of feeling, the CEOs copied the letter to the Prime Minister Julia Gillard’s senior adviser, Treasurer Wayne Swan’s chief of staff and Communications Department secretary Peter Harris.

The letter, dated March 22 and revealed on The Australian Financial Review website this week, has been leaked now because Senator Conroy must soon announce a ministerial determination that will tell the competition regulator on what basis to judge whether Telstra’s looming structural separation gives its competitors “equivalent" access to its copper network.

Related Quotes

Company Profile

“We submit that the minimum requirement for equivalence to be delivered is that Telstra acquires access to the copper network for the delivery of fixed-line retail services under an arm’s length contracting arrangement utilising the same ordering, provisioning, maintenance and pricing arrangements that it has already installed for the use of competitors," says the letter.

But to some that could sound more like the so-called “functional separation" that Telstra thought it had escaped as part of agreeing to help the project – which it is also doing under threat of the enforced sale of its cable network, Foxtel stake and denial of access to 4G mobile phone spectrum. Senator Conroy’s problem is that he needs Telstra to complete its proposed $11 billion deal to hand its fixed line monopoly to NBN Co. Without the deal, the project’s already-challenged finances will be even more stretched.

And Telstra must get approval for the deal from its 1.3 million shareholders at its October annual meeting (assuming the two sides can announce the formal deal in the next few weeks as expected).

As evidenced by the efforts that Labor went to in launching the NBN’s first mainland trial in Armidale this week, the popular broadband policy is the government’s strongest suit.

But the NBN project appears to be on increasingly shaky ground.

NBN Co chief executive
Mike Quigley
is under pressure, having come under fire from hostile media outlets over his handling of a bribery scandal at his former employer Alcatel-Lucent. Mr Quigley has had to suspend the $12 billion to $14 billion construction tender for the project because the construction industry said he was trying to get it to take on too much risk.

And the Telstra deal remains incomplete, with Mr Quigley warning this week that until it is passed by Telstra shareholders, the already-delayed project cannot begin in earnest. Meanwhile, the opposition – which would scale back the project – remains on the warpath, this week highlighting Senator Conroy’s errors in explaining its costs.

So it is perhaps little surprise that Telstra’s rivals are less focused on the promise of the NBN’s high-speed fibre optic network than the current reality: that they will be largely reliant on Telstra’s ageing copper network for access for some time to come.